Normal Repairs, Replacement, and Maintenance Exception Not Applicable to a Two-Story Addition
In Fisher v. Township of White River, Michigan Court of Appeals, No. 303159, April 12, 2012, the value of taxpayers' property was not improperly increased for local Michigan property tax assessment purposes in violation of the Headlee Amendment, Proposal A, and Mathieu-Gast legislation prohibiting an increase in value based on normal repairs, replacement, and maintenance because a two-story addition to the back of the taxpayers' home involved considerable new construction that added value to their home beyond normal repair, replacement, and maintenance. Further, although the Headlee Amendment to the Michigan Constitution (Art. 9, §31), and Proposal A (Art. 9, §3) placed restrictions on increases in property tax, both excluded additions to the property from this protection. "Additions" referred to all increases in value caused by new construction or a physical addition of equipment or furnishings. In this case, the taxpayers' home was badly damaged during a storm and, as a result, the single-story portion at the back of the home was demolished and a two-story addition was constructed in its place.
The Michigan Court of Appeals concluded that the true cash value of the additions, in excess of the repair, replacement, and maintenance value, allowed for an increase in the taxable value of the property. Contrary to the taxpayers' assertions, this was not an uncapping of their home's value but an increase in the taxable value of the home to account for the value added by the addition that was not normal repair, replacement, and maintenance.